Price change elasticity directly impacts revenue.
*Elastic- price goes up, total revenue goes down.*
Inelastic- price goes up, total revenue also goes up
a) elastic
b) inelastic
and c) unit elastic
B) inelastic = less than 1, less responsive
c) unit Elastic = 1, no change in behavior
(example: size of a restaurant is "fixed" for now until you build a bigger one)
Which type of “product” term measures the *additional output gained* from the addition of ONE WORKER?
Total Cost / Quantity
(TC divided by Q)
Variable costs/quantity
//
fixed cost/quantity
*Revenue minus explicit costs*
(Accounting profit is the profit after subtracting explicit costs (such as wages and rents))
*Revenue minus implicit and explicit*
(Economic profit includes explicit costs as well as implicit costs (what the company gives up to pursue a certain path) ALWAYS LESS THAN ACCOUNTING Profit)
Accounting profit represents a company's true profitability
Total costs includes...
implicit - explicit - or both
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